from the bungled-PR dept

Poor Sprint. Ever since T-Mobile became the darling of the wireless industry simply for treating consumers well (ingenious!), Sprint hasn't quite known what to do with itself. After T-Mobile leap-frogged Sprint to become the nation's third-largest carrier last year, Sprint has been trying desperately to convince customers that hey, it's really cool too. But Sprint has found it hard to shake the image that it's little more than a decidedly unhip copycat with a less competent network. A lot of Sprint's PR struggles have been thanks to the fact that it hasn't been easy keeping up with T-Mobile's foul-mouthed, hipster-esque CEO, John Legere.

Sprint's latest effort was to involve a series of ads featuring Sprint CEO Marcelo Claure sitting down with hundreds of "normal folk" in 10 different cities to, apparently, make fun of T-Mobile. Unfortunately the company's very first ad in the series has ruffled more than a few feathers for being little more than thirty seconds of people laughing at the idea of T-Mobile as a "ghetto":

So yes, the idea of an ad in which a group of mostly white people sit around laughing at the idea of ghettos just isn't something most PR departments would sign off on. Sprint unsurprisingly had to pretty quickly pull the ad, and Claure headed to Twitter to insist that the company was just trying to have a conversation with regular folk:

We're sharing real comments from real customers. Maybe not the best choice of words by the customer. Not meant to offend anyone.

And Sprint's adventures in bad PR could have ended there, were it not for a follow up exchange between one annoyed customer and Claure, in which the CEO lectured a Latino man on just how he should behave while being offended:

@luism1023 that I won't take. I am as Latino as you are so don't try to pull that card.

Right, except that as a CEO you made $21.8 million in fiscal year 2014, making your life experiences notably...different. You're also supposed to be conducting a customer listening tour, remember? So even if your intentions were good and you don't agree with your customers being offended, you were supposed to be listening to them. Not giving them a lecture on how or when they're allowed to be offended. All in all it's another example of how, even with funding from Japan's SoftBank propping up its sagging reputation, Sprint just can't seem to get out of its own way and find a path to consumers' hearts.

from the blowhards-and-fisticuffs dept

Netflix's criticism of usage caps and vocal support of net neutrality (not to mention its threat as a pay TV competitor) has helped it replace Google as public enemy number one for the telecom industry. As such, every PR, lobbying, and political asset at the telecom industry's disposal has taken aim at the streaming giant over the last few years, accusing the company of being a dirty freeloader and horrible hypocrite that's unfairly lobbying the government to attack poor, honest, hardworking companies like AT&T and Comcast.

So when Netflix announced last week it was throttling the connections of AT&T and Verizon customers, the telecom industry's various policy tendrils quivered in collective orgasm at the fresh opportunity for attack.

As noted last week, offhand comments by T-Mobile CEO John Legere appear to have forced Netflix to admit that it has been throttling AT&T and Verizon wireless customers back to 600 kbps. This was, the company insists in a blog post, an attempt to help out users stuck on metered plans with low usage caps and high overage fees. More curiously perhaps, Netflix also admitted that it hasn't been throttling connections for users on Sprint and T-Mobile, because "historically those two companies have had more consumer-friendly policies" (read: they offer unlimited data plans).

Netflix's revelation quickly resulted in AT&T, a company that has throttled customers and lied about it for years, insisting it was "outraged" by the revelation (since obviously Netflix's decision would have cost it user overage fee penalties). The American Cable Association, a coalition of hundreds of smaller cable companies (but with Comcast NBC Universal also as a member) took things one step further, issuing a statement demanding an FCC investigation into Netflix's behavior:

"ACA has said all along that this Federal Communications Commission's approach to Net Neutrality is horribly one-sided and unfair because it leaves consumers unprotected from the actions of edge providers that block and throttle lawful traffic. The FCC's disclosure rules also fall short by covering ISPs but allowing edge providers to affect consumers' Internet experience in the same ways that ISPs' actions can. And now we see further evidence of these shortcomings in Netflix's confession that it has been engaging in covert video throttling to select groups of consumers."

"ACA is disappointed, but not surprised, that Netflix used its immunity from the FCC's Net Neutrality rules to engage in this practice. Netflix has the ability and incentive to engage in this anti-consumer behavior notwithstanding its impact on the virtual cycle that promotes the broadband deployment sustaining Netflix's business model. In light of this revelation, ACA calls on the FCC to initiate a Notice of Inquiry into the practices of edge providers and how these companies can threaten the openness of the Internet. Under Section 706, the FCC has the authority to conduct such an inquiry and issue regulations, should it be deemed necessary."

There's obviously a few things wrong with that statement. One, it's not a net neutrality violation if you're throttling yourself, that's just vanilla stupid. Two, net neutrality rules were applied to the broadband industry because of limited competition. If there was competition, users could punish bad behavior by switching ISPs, making the rules unnecessary. Net neutrality rules weren't applied to edge content companies because users actually have a choice of options there. The same can't be said for the broadband industry, where most are lucky to have the choice of one ISP that can provide anything resembling next-gen connectivity.

If there's one thing that Netflix can be dinged for, it's for lecturing ISPs on transparency, then failing to reveal that this was even happening. And thanks to competition, anybody bothered by that (and that's not many, since nobody noticed what Netflix was doing for five years) has the choice of switching streaming video providers. But an investigation into a company for effectively throttling itself? The cable industry either doesn't actually understand how net neutrality works, or it's feeding the public a line of bullshit, trying to saddle Netflix with regulations it just spent the last decade trying to argue weren't necessary in the first place.

from the neutrality-soap-opera dept

Netflix this week admitted that the company has been throttling the video streams of most wireless customers around the world to 600 kbps, a practice the company claims is necessary to protect users from usage caps and wireless overage fees. It was the first time Netflix acknowledged the practice, which the company said it's been engaged in for five years. The more interesting part? The company admitted to the Wall Street Journal that it's apparently not throttling the video streams of companies whose consumer policies Netflix agrees with:

"Netflix said it doesn’t limit its video quality at two carriers: T-Mobile and Sprint Corp., because “historically those two companies have had more consumer-friendly policies.” When customers exceed their data plans on Sprint or T-Mobile, the carriers usually slow their network connections, rather than charge overage fees."

The Netflix reveal came after T-Mobile CEO John Legere spent last week defending T-Mobile's controversial Binge On service, which throttles partner video streams to 1.5 Mbps or 480p. Legere spent much of the week poking various news outlets with claims that AT&T and Verizon throttle video streams even further than Binge On, something both companies spent much of last week denying. It didn't apparently take long for the Journal to dig deeper and get an admission out of Netflix that it was the one doing the throttling.

Despite the clear admission from Netflix that it's the one throttling, Legere continues to take to Twitter to blame AT&T and Verizon, meaning he either didn't understand the story he'd read, or he's intentionally being misleading in an attempt to redirect people from recent Binge On criticisms:

2/ I called out @verizon and @att just last week about this – they denied, tried to make it about throttling and called me ‘dopey’!

AT&T, meanwhile, hoping to cash in on the story and paint Netflix as a hypocrite, had its top lobbyist pretend to be "outraged":

"We’re outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent,” said Jim Cicconi, AT&T’s senior executive vice president of external and legislative affairs."

After revealing its throttling to the Journal, Netflix posted a new blog post in which it pretended it was revealing its throttling practices by choice, "announcing" it was working on tools that would help customers better manage their data consumption:

"We believe restrictive data caps are bad for consumers and the Internet in general, creating a dilemma for those who increasingly rely on their mobile devices for entertainment, work and more. So in an effort to protect our members from overage charges when they exceed mobile data caps, our default bitrate for viewing over mobile networks has been capped globally at 600 kilobits per second. It’s about striking a balance that ensures a good streaming experience while avoiding unplanned fines from mobile providers.

This hasn’t been an issue for our members. Our research and testing indicates that many members worry about exceeding their mobile data cap, and don’t need the same resolution on their mobile phone as on a large screen TV to enjoy shows and movies. However, we recognize some members may be less sensitive to data caps or subscribe to mobile data plans from carriers that don’t levy penalties for exceeding caps. As we develop new technologies, we want to give all our members the choice to adjust their data consumption settings based on their video preferences and sensitivity to their ISPs data overage charges. We’ll provide more details as we get closer to launch.

So to be clear: Netflix should have been more transparent about what it was doing and provide users with better controls (desktop users can adjust streaming quality rather easily), especially if it's going to lecture ISPs on transparency. That said, given Netflix's positions on net neutrality and usage caps, you're sure to see the story blown up into more than it is by ISPs and their various mouthpieces, who'll likely either call this a net neutrality violation itself (it's not; throttling yourself isn't like throttling a competitor, and users have a choice of streaming services) or continue the industry claim that Netflix is a shady villain that treats giant, lumbering telecom duopolies unfairly.

But the crux of the problem here remains usage caps, not Netflix. Sure, Netflix isn't being entirely altruistic. Annoyed customers banging their heads against usage caps watch less streaming video, which for many fixed-line ISPs like Comcast is the entire point. For wireless carriers it's obviously different, with the goal being to drive consumption however possible. But the fact that a company was forced to offer a lower quality service -- instead of competing to provide the best stream possible -- shows how arbitrary usage caps by their very nature distort and damage markets. And that's before you even get to the anti-competitive implications of zero rating.

from the sometimes-a-duck-is-still-a-duck dept

Last year you'll recall that T-Mobile launched its "Binge On" zero rating program, which exempts the biggest video services from the company's usage caps (aka "zero rating"). Net neutrality advocates quickly complained that the practice violated net neutrality, since the very act of giving some companies an advantage automatically disadvantages some others. After T-Mobile spent some time lying about the nature of the program, the EFF came out with a detailed report noting that T-Mobile was just throttling all video files back to 1.5 Mbps, whether the content was being streamed or directly downloaded.

Net neutrality advocates like the EFF argued that the program at the very least should be opt in instead of opt out, concerns that T-mobile continues to ignore. YouTube similarly initially complained about the program and that video partners were being throttled by default. But in a matter of months, Alphabet/Google appears to have completely changed its mind, issuing a new blog post that says it's now partnering with T-Mobile to zero rate Google Play Movies and YouTube content traveling over the T-Mobile network.

According to YouTube, T-Mobile made a number of changes to Binge On that satisfied YouTube's concerns, including new "short codes" that let users more easily opt out. T-Mobile also apparently was willing to listen to YouTube's concerns about throttling partner services by default with no dialogue between companies:

"While T-Mobile has always stated that any video service can join the program at no charge, prior to our discussions, video services were not given a choice about whether their streams would be managed by T-Mobile if they did not join the program. Going forward, any video service meeting traffic-identification requirements will be able to opt-out, and T-Mobile will stop including them in the Binge On program and will no longer modify their video streams. In addition, T-Mobile will now work with video services that wish to optimize their own streams, using an average data rate limit. This allows video services to offer users an improved video experience, even at lower data rates, by taking advantage of innovations such as video compression technology, benefiting T-Mobile, their customers, and video providers.

To be clear it's good that T-Mobile is being slightly more transparent, even though it lied pretty consistently about what it was actually doing in the first place. It's also great that the company is providing better, simpler opt-out tools for consumers (dial #263# to turn Binge on off, and dial #266# to turn it on again). And it's also a major improvement that T-Mobile's letting video service providers opt out, while giving companies more control over precisely how video traffic is managed. The problem is that none of this solves the core problem with zero rating: the horrible precedent set by zero rating in the first place.

The superficial consumer lure of "free data" overshadows the fact that zero rating, no matter how much lipstick you put on it, still puts some companies at a market disadvantage. In a press release announcing YouTube's inclusion, T-Mobile crows that there's now 50 Binge On video partners. But how many video services exist on the Internet? 500? 1000? How many non-profits, educational services, startups, and independents still aren't being whitelisted by T-Mobile's systems? How many even realize they're being put at a market disadvantage to bigger companies?

By opening the door to zero rating a sliver, we've opened the door to fundamentally changing how Internet business works. That's why numerous regulators in India, Japan, The Netherlands and elsewhere have banned zero rating outright. Here in the States, the FCC, wary of hindering usage cap driven "innovation," decided to let the zero rating story play out, addressing anti-competitive behavior on a "case by case basis." But the FCC has failed to act, and that failure has not only resulted in T-mobile's Binge On (potentially bad), but companies like Verizon and Comcast now exempting their own content from caps (immeasurably worse).

Despite its faux-punk-rock consumer friendly rhetoric, T-Mobile has never been a fan of net neutrality, repeatedly coming out against both net neutrality rules and the FCC's Title II push. Google, once a net neutrality champion, has consistently weakened its position on the subject as it realized it too could benefit from a distorted playing field (especially in mobile).

Because users get "free data" doesn't mean zero rating is a good idea. Because YouTube's now happy that it has a little more control, doesn't make zero rating a good idea. Because users and companies can opt out, doesn't negate zero rating's negative impact on the Internet economy. Because all-too-many consumers, analysts and journalists don't really understand what's happening here doesn't make zero rating a good idea. Setting arbitrary usage caps and then letting some companies bypass them aggressively distorts the entire landscape of the Internet. But because so many folks still don't appear to understand this, we're down the zero rating rabbit hole. And it's not really clear if we're ever coming back.

from the first! dept

At the Mobile World Congress convention in Spain last week, one of the most well-hyped products in convention history was something that doesn't technically exist. Fifth generation wireless (5G) was all the rage at the show, with multiple carriers promising they were in various stages of bringing the new ultra-fast wireless standard to consumers. The problem is that while engineers have a general idea of some of the technologies that may be included in the final standard when approved, nobody actually knows what 5G is yet. And when it does finally get solidified, it's likely to be 2020 or later before actual launches occur.

For marketing departments, this apparently wasn't a problem, but an opportunity. Verizon immediately set to work well ahead of any standard ratification, telling anybody who'll listen that the company has begun trialing 5G wireless service capable of 1 Gbps, with deployment scheduled for sometime in 2017. That resulted in a lot of press outlets crowing that we'll be enjoying wireless service faster than Google Fiber in just a few years. But to be clear, Verizon's testing a lot of technologies that may or may not be part of 5G, including beam forming, NFV and SDN integration, and millimeter wave technologies.

But these early trials (focused mostly on fixed, not handset, 5G) overshadow the fact that there's still multiple global partners and a wide variety of coalitions debating what the standard will even look like. A hard standard isn't actually expected to emerge until 2018, with actual real-world deployment not expected until 2020 (which in telecom terms means 2021 or 2022). Verizon competitor T-Mobile isn't mincing words when it comes to what Verizon's up to:

"We're starting to see a lot of news starting to form in and around the 5G space," T-Mobile CTO Neville Ray said during a conference call to discuss the carrier's quarterly earnings. "I think folks have seen some of the earlier announcements, and you know, Verizon trying to move and saying they're going to be the first to 5G, well, it's kind of BS, to be honest."

Entertaining T-Mobile CEO John Legere was a little more blunt in his assessment of Verizon's planned 2017 5G "launch":

"That's pure horseshit; it's not going to happen," Legere said on the call. "Either (McAdam) doesn't know, or what they're attempting to do is what they've done before several times, to connect the current (capabilities) to a long-term strategy for 5G, but call it 5G way before the standards or the handset capabilities are available."

Why's Verizon marketing 5G so hard, so early? As competitive pressure from T-mobile has grown, Verizon has found it harder and harder to avoid having to compete directly on price. Verizon avoids direct price competition like a chatty, annoying party attendee, arguing price competition isn't necessary because Verizon has the superior network. But as T-Mobile's network has gained ground, Verizon's argument has started to run out of runway. Enter 5G: something Verizon can "beat" the other carriers at even if nobody actually knows what the race track even looks like:

"We’re so far away from it, it’s not even funny,” Recon Analytics’ Roger Entner said. “There is a lot of prep work going on, but to a certain extent this all reminds me of a toddler wearing a Harvard class of 2035 bib. So we have to be measured with our enthusiasm.”...“In a marathon run, we’ve barely passed the 100 meter line,” Entner said. “It’s way too early (to tell who’s ahead), so everybody is just saying ‘Hey, we’re out of the starting blocks, look at us.’ But all of them are neck and neck with each other."

Ah, marketing. That's not to say 5G doesn't offer some major reasons to be excited, and it will usher forth the start of wireless actually being a stronger fixed-line broadband alternative. But with the kind of pricing companies like Verizon have pushed with their 4G services, whether you'll be able to afford the next-generation leap is another question entirely. And given that the United States currently sits 55th in terms of overall current 4G LTE speeds, 5G's potential doesn't mean U.S. carriers should get too far ahead of themselves.

from the rock-and-a-hard-place dept

While the public successfully forced the FCC to adopt net neutrality rules last year, one glaring omission may be coming back to haunt consumers and the commission alike. The FCC's open Internet rules contain three "bright-line" restrictions: no blocking, no throttling apps or traffic, and no "paid prioritization" of apps or content. Unlike neutrality rules in Japan, The Netherlands, Slovenia, and Chile however, the FCC refused to outright ban zero rating (exempting content from usage caps), instead opting to determine on a "case-by-case basis" if a carrier is violating the "general conduct" portion of the rules.

As we worried last year, this opened the door to ISPs trampling all over net neutrality -- just so long as they were marginally clever about it. And that's exactly what has happened, with AT&T, Verizon, Comcast and T-Mobile all running rough shod over net neutrality with varying degrees of obnoxiousness and success.

T-Mobile is now zero rating all the major music and video services, while throttling every video service that touches its network to 1.5 Mbps by default (and lying about it). AT&T has been charging companies for cap-exempt status for a few years now under its controversial "Sponsored Data" program, which tilts the playing field against smaller competitors and startups that may not be able to afford AT&T's toll. Verizon recently followed suit with "Free Bee" sponsored data, which lets companies pay Verizon to have their app, video, or entire website or service tagged with premiere, cap-exempt status.

In each example, carriers have injected themselves into the middle of the content stream for marketing or direct financial benefit, in the process completely dismantling the level playing field enjoyed by smaller companies, startups and non-profits. These smaller operators may not be able to pay to play, and in some instances won't even realize they're being discriminated against. And because these services are pitched as "free shipping" or "a 1-800 number for data," some consumers are applauding as the open Internet gets dismantled piecemeal, oblivious to the fact that usage caps are arbitrary constructs to begin with.

And while AT&T, Verizon and T-Mobile are at least being marginally subtle about it, Comcast simply declared "fuck it" -- first imposing completely unnecessary usage caps on millions of its broadband customers to hinder Netflix, then making its own streaming video service cap exempt. When pressed, Comcast's bullshit department proudly declared it wasn't violating net neutrality -- because its streaming video service runs entirely over "Comcast's managed network to the home." So yes, as predicted, net neutrality is crumbling under the weight of rule loopholes and immaculately-crafted bullshit.

Wheeler pointed out that the meetings the FCC has been holding with those companies--Comcast, AT&T, T-Mobile and likely Verizon--were at the bureau level, which he said was significant. "I am not at these meetings," he said. "Nobody from the office of the chairman is in these meetings. They're gathering information and we'll see what happens from there."

It's not really clear just how much data the FCC needs to collect. AT&T's Sponsored Data and Comcast's (ab)use of usage caps are obviously problematic, and have been in play for several years. The real problem for the FCC isn't information, it's limited time and shaky legal footing. One, the upcoming elections could result in a President that has no idea what net neutrality is, who immediately sets forth replacing Wheeler and dismantling the net neutrality rules. Two, the FCC is still waiting for the outcome of the mass-industry lawsuits against the rules, which could leave the FCC without a leg to stand on.

I asked Public Knowledge lawyer Harold Feld, who probably spends more time submerged in FCC policy than anyone, what he thought the next course of action would be at an FCC boxed in by the courts and politics. He suggested that the agency might follow the course it set on the interconnection front, which began with a few pointed inquiries and ended with incumbent providers magically ceasing shenanigans for fear of FCC enforcement. Feld posits that something similar could be applied to zero rating, finally letting companies know what is or what isn't acceptable:

The FCC has already gotten 12,000+ complaints about Comcast. It would not be hard to bump them to the top of the list. But Wheeler may not want to start an investigation when he only has a limited time left in office and a future FCC might drop the matter. Instead, Wheeler may push for some kind of Policy Statement or Enforcement Guidance. Something that would provide notice industry wide about what the FCC would consider "red lines" on data caps.

But Wheeler has been very clear that he is not promising to do anything but check under the hood. I certainly would not expect the FCC to do anything until the D.C. Circuit decides -- especially in light of the possibility that the FCC could win on wireline and lose on wireless. If the D.C. Circuit decides in the late spring or early summer, that will not leave much time for the FCC to take any kind of official action.

In other words? If you're expecting any hard enforcement from the FCC when it comes to caps or zero rating, you shouldn't hold your breath. The agency is currently boxed in by both lawsuits and the upcoming election, but had already made it clear it thinks zero rating and usage caps are just "creative pricing." Should the rules remain fully intact post lawsuit and election, political pressure might force the FCC to take action against Comcast's less-than-subtle abuse of usage caps, but things aren't looking good if you're part of the vast minority that realizes the horrible precedent zero rating represents.

The 51-page report by van Schewick details the problems with Binge On in great detail, noting that it falls afoul of the FCC's transparency rules, that it unfairly picks winners and losers and that it harms competition. The core argument:

Binge On undermines the core vision of net neutrality: Internet service providers (ISPs) that
connect us to the Internet should not act as gatekeepers that pick winners and losers online by
favoring some applications over others. By exempting Binge On video from using customers’ data
plans, T-Mobile is favoring video from the providers it adds to Binge On over other video.

T-Mobile says that it does not intend to become a gatekeeper on the Internet: It says Binge On is
open to all legal video streaming providers at no cost, as long as they can meet some “simple
technical requirements.” The idea is that any discriminatory effects of Binge On disappear as more
providers join the program. However, the technical requirements published on T-Mobile’s website
are substantial. They categorically exclude providers that use the User Datagram Protocol (UDP),
making it impossible for innovative providers such as YouTube to join. They discriminate against
providers that use encryption, a practice that is becoming the industry standard. While some
providers can join easily, a significant number will need to work with T-Mobile to determine
whether their service can be part of Binge On. Many will have to invest time and resources to
adapt their service to T-Mobile’s systems. The smaller the provider, the longer it will likely take
for T-Mobile to get to it.

The result: Binge On allows some providers to join easily and creates lasting barriers for others,
especially small players, non-commercial providers, and start-ups. As such, the program harms
competition, user choice, free expression, and innovation.

What's perhaps even more interesting is that van Schewick includes in the report alternatives that T-Mobile could have adopted that would have created similar plans that actually benefit consumers without messing up net neutrality:

Binge on in its current form violates net neutrality. However, T-Mobile could offer alternative
innovative plans that benefit customers and allow the ISP to compete without violating net
neutrality. For example, T-Mobile could offer customers a zero-rated low-bandwidth mode at the
same speed as Binge On, but contrary to Binge On, customers would be able to use this mode to
watch video or do anything else online. It would be their choice.

Alternatively, T-Mobile could allow customers unlimited access to the entire Internet after
customers reach their cap, just at a slower speed – the same speed currently offered through Binge
On. After reaching their cap, customers could watch video or do anything else online; again it
would be their choice. This option offers customers truly unlimited video, unlike Binge On.
Contrary to advertising, Binge On video is limited: Customers can watch video included in the
program only until they reach their monthly data cap through other Internet uses that are not zerorated.
As such, advertising Binge On as “unlimited” video might violate the FCC’s transparency
rule, which requires ISPs to accurately describe their service. In contrast, this alternative option
would allow T-Mobile to offer “unlimited video streaming” that stands up to its name and respects
net neutrality.

Finally, T-Mobile could increase the monthly data caps on its capped plans to account for the
average amount of video that people are watching. Customers could use that additional bandwidth
to do anything online, including watching video. Again, it would be their choice. All of these
alternative plans are entirely consistent with net neutrality.

from the principles-for-sale dept

Last year, you might recall that Netflix took some heat for striking zero rating deals with Australian ISPs, exempting Netflix content from broadband usage caps. Australia was a relatively unique scenario in that the cost of transit is so high, most big content services had struck similar deals, and Netflix didn't want to put itself at a disadvantage in the newly launched Australian market by stubbornly holding on to neutrality principles. Still, it's worth recalling what Netflix said after a few weeks of criticism:

"Data caps inhibit Internet innovation and are bad for consumers. In Australia, we recently sought to protect our new members from data caps by participating in ISP programs that, while common in Australia, effectively condone discrimination among video services (some capped, some not). We should have avoided that and will avoid it going forward. Fortunately, most fixed-line ISPs are raising or eliminating data caps in line with our belief that ISPs should provide great video for all services in a market and let consumers do the choosing."

"Zero rating isn't great for consumers as it has the potential to distort consumer choice in favor of choices selected by an ISP."

Fast forward to 2016, and Netflix is suddenly throwing its support behind T-Mobile and its controversial Binge On zero rating program. Speaking on the company's earnings call this week, Netflix CEO Reed Hastings praised Binge On, which throttles every shred of video that touches the T-Mobile network to 1.5 Mbps, whether or not consumers or content partners asked it to. According to Hastings, he's thrilled about the program because it has driven more usage to Netflix:

"It’s voluntary to the customer. Every customer of T-Mobile can decide to turn it on or turn it off," Hastings explained on an earnings call today. "They’re not charging any of the providers. It’s an open program. Many of our competitors such as Hulu and HBO are in the program also." Netflix may be more inclined to defend this program because the company benefits from it: Hastings says that Netflix is seeing more viewership from T-Mobile customers — no surprise since it makes "unlimited video consumption possible." Hastings added that he hopes these kinds of programs expand further."

But as the EFF has pointed out, the fact that users can opt out is irrelevant. T-Mobile's been throttling every shred of video that touches its network to 1.5 Mbps (streamed or direct downloaded) by default, and then lying about it. Critics like YouTube and the EFF have, quite correctly, pointed out that such a program should be opt-in, for both consumers and content partners. The other problem is simply one of precedent; let T-Mobile dick about with how content gets treated, and that opens the door to every carrier modifying traffic to their own benefit.

By refusing to ban zero rating outright, the FCC has opened the door to a flood of similar ideas that are even worse and, cumulatively and aggressively, are eroding the idea of an open Internet. Worse, it's happening to the thunderous applause of some consumers, who think they're being given a gift when an ISP imposes utterly arbitrary usage caps, then graciously allows select content to bypass said caps. Make no mistake though; the act of fucking about with traffic in this fashion is an assault on net neutrality. That many people don't understand this yet (or are eager to ignore the fact when it benefits them) doesn't magically make it less true.

A few years ago, Netflix's Hastings went on a Facebook rant about how Comcast was unfairly letting its own streaming services bypass the company's usage caps. But now that Netflix is seeing benefits from zero rating, it's apparently willing to throw its principles in the toilet. Netflix may want to be careful where it treads. As some companies have discovered, zero rating isn't your friend -- and the special treatment that benefits you today may come back to bite you tomorrow.

from the let's-be-clear-here dept

Earlier today we wrote about the latest misleading claims from John Legere and T-Mobile about its BingeOn program. I've seen some confusion some of the discussions about this -- some of it thanks to Legere's misleading claims -- so I wanted to go through exactly what T-Mobile appears to be doing and why it's problematic. Also, with that, I wanted to highlight the key part of the FCC's net neutrality rules regarding throttling, and the one single paragraph that T-Mobile appears to be banking on to protect it from getting slapped around.

First, let's be clear: T-Mobile wants to pretend that this is a "semantic" dispute about what it's doing, but that's bullshit. From the beginning the company has been flat out lying about its actions. That may get it in trouble in two ways -- first for violating the bright-line "no throttling" rules and for violating the corresponding transparency rules as well.

So what is T-Mobile doing: if you're a T-Mobile customer and you visit a page to stream or download video (whether or not it's a BingeOn partner), T-Mobile is automatically slowing down your bandwidth to about 1.5 Mbps. That's the throttling bit. What T-Mobile is telling people is that it's "optimizing" the video to a lower resolution. That may be true with some partners, but it's not true of non-partners, especially ones that are encrypted, such as YouTube, where T-Mobile has no way of "optimizing" the video. Instead, even with encrypted streams, since the metadata is still there, it can tell that you're, say, suddenly getting a lot of data from YouTube, and then it automatically slows down the bandwidth.

T-Mobile is hoping that at the server end, YouTube or any other video provider will see this slow bandwidth and say "oh, there's a narrow pipe here, so we should degrade the video down to lower resolution. So, if there's any "optimization" going on, it's actually happening at the server end after T-Mobile has basically tricked them into thinking there's a slow connection. But, in many cases, that doesn't happen, and the end result is not optimized video, or faster video, or even (as T-Mobile keeps claiming) getting to view 3x the amount of data under existing data caps. Instead, it's just the same video at the same resolution... but comes in much more slowly with lots of buffering.

So, to repeat: don't fall for John Legere's spin. The "proprietary technology" he keeps touting is not optimizing non-partner video. It is doing one thing and one thing only: and that's throttling the video.

Now, on to the FCC's rules. Let's look at what the rules pretty clearly say:

A person engaged in the provision of broadband Internet access service, insofar as such
person is so engaged, shall not impair or degrade lawful Internet traffic on the basis of
Internet content, application, or service, or use of a non-harmful device, subject to
reasonable network management.

Throughout the FCC's statement on the rules, it notes that this is a bright line rule.

With the no-throttling rule, we ban conduct that is not outright blocking, but inhibits the
delivery of particular content, applications, or services, or particular classes of content, applications, or
services. Likewise, we prohibit conduct that impairs or degrades lawful traffic to a non-harmful device
or class of devices. We interpret this prohibition to include, for example, any conduct by a broadband
Internet access service provider that impairs, degrades, slows down, or renders effectively unusable
particular content, services, applications, or devices, that is not reasonable network management. For
purposes of this rule, the meaning of “content, applications, and services” has the same as the meaning
given to this phrase in the no-blocking rule. Like the no-blocking rule, broadband providers may not
impose a fee on edge providers to avoid having the edge providers’ content, service, or application
throttled. Further, transfers of unlawful content or unlawful transfers of content are not protected by the
no-throttling rule. We will consider potential violations of the no-throttling rule under the enforcement
provisions outlined below.

We find that a prohibition on throttling is as necessary as a rule prohibiting blocking.
Without an equally strong no-throttling rule, parties note that the no-blocking rule will not be as effective
because broadband providers might otherwise engage in conduct that harms the open Internet but falls
short of outright blocking. For example, the record notes the existence of numerous practices that
broadband providers can engage in to degrade an end user’s experience.

From that, it seems fairly clear that what T-Mobile is doing violates the no throttling rule. It is slowing down a class of content that is not for anything having to do with reasonable network management.

But T-Mobile keeps harping on the fact that this is "the user's choice" and even claimed throttling is only throttling if the user has no choice. That's because of the next paragraph in the rules -- and this seems to be the entire crux of T-Mobile's argument for why it's not violating the rules:

Because our no-throttling rule addresses instances in which a broadband provider targets
particular content, applications, services, or non-harmful devices, it does not address a practice of slowing
down an end user’s connection to the Internet based on a choice made by the end user. For instance, a
broadband provider may offer a data plan in which a subscriber receives a set amount of data at one speed
tier and any remaining data at a lower tier. If the Commission were concerned about the particulars of a
data plan, it could review it under the no-unreasonable interference/disadvantage standard. In contrast,
if a broadband provider degraded the delivery of a particular application (e.g., a disfavored VoIP service)
or class of application (e.g., all VoIP applications), it would violate the bright-line no-throttling rule. We
note that user-selected data plans with reduced speeds must comply with our transparency rule, such that
the limitations of the plan are clearly and accurately communicated to the subscriber.

It's this paragraph that is going to be scrutinized like crazy. T-Mobile insists that because you have the choice to turn BingeOn off, that means that this is "based on a choice made by the end user" and thus the "no throttling" rule doesn't apply.

That seems like a difficult argument to sustain, given that T-Mobile made the initial choice for all of its users. So that initial choice was not made by the user, even if they can (through a convoluted process) turn it off. Separately, the second part that I bolded above appears to totally undermine T-Mobile's argument. It is degrading a class of applications (all video applications) and thus, the FCC rules note, it violates the bright-line no-throttling rule.

There is, separately, the issue of transparency. T-Mobile claims that it was transparent about all of this, but I don't think that's actually true. As we've covered, it really buried and hid the fact that BingeOn applied to non-partner videos, and did so in a confusing way. It also lied about the optimization and the claim that it couldn't even do anything to YouTube videos at the very time it was absolutely throttling them. That's not very transparent. On top of that, by continually falsely claiming that this was "optimization" not "throttling" and even claiming that it would "speed up" videos, rather than slow them down, I do wonder how the company can claim it was truly transparent.

On that front, T-Mobile has been relying on claims that it emailed and texted customers about the move. I have looked and I have received no such emails or texts. In fact, here are all the texts I've received from T-Mobile since August. Note the lack of any text about BingeOn.

Of course, who knows how the FCC will eventually deal with this, but the claim that the company is optimizing, rather than throttling is flat out wrong. It's a lie. The claim that it's respecting the net neutrality rules by letting you opt-out is questionable at best, and most likely false, as the consumer made no initial choice for the throttling. It's moves like these that raise serious questions about just how "consumer friendly" T-Mobile is really being, and which are seriously undermining trust in the company.

from the give-it-up,-john,-it's-over dept

The big story of last week was T-Mobile CEO John Legere's meltdown over people calling out the bullshit claims about BingeOn "optimizing" mobile video when the truth is that it was simply throttling all video traffic (partners and non partners alike). Things got even worse when Legere decided to attack EFF and suggest that it was being paid to discredit BingeOn. The simple fact remains, however, that T-Mobile is throttling video streams (and downloads).

Legere briefly went quiet about all of this, but on Monday came out again with yet another statement in the form of an "Open Letter to Consumers about Binge On" which is at least a little more honest, but is still mostly misleading bullshit -- the very thing T-Mobile has built its recent reputation on avoiding.

We invented Binge On to provide customers with an easy and effective way to stretch their data bucket. Knowing that the number one (and climbing) use of data out there is video, it was obviously the natural place to focus. Binge On is like an economy button built into a new car to save gas, and it’s a benefit that customers got the minute we launched, to use it as much as they want to. Period.

Again that sounds good but is totally misleading. First of all, it's T-Mobile that sets the data buckets in the first place. So relieving consumers of the burden that T-Mobile itself placed on consumers is not a consumer-friendly move. It's punching someone and then claiming you're being nice by offering them a hand to get them off the ground. If you start the anti-consumer practice, it's not pro-consumer to roll back a tiny part of it.

Binge On is a FREE benefit given to all T-Mobile customers. It is and always has been a feature that helps you stretch your data bucket by optimizing ALL of your video for your mobile devices.

If this were truly a "benefit" then why does it also apply to unlimited accounts (like mine)? Unlimited account holders don't need or want this "benefit" (and it's not really much of a benefit as we'll get to).

We use our proprietary techniques to attempt to detectall video, determine its source, identify whether it should be FREE and finally adjust all streams for a smaller/handheld device. (Most video streams come in at incredibly high resolution rates that are barely detectable by the human eye on small device screens and this is where the data in plans is wasted). The result is that the data in your bucket is stretched by delivering streamed video in DVD quality - 480p or better (whether you have a 2GB, 6GB or 10GB plan etc.) so your data lasts longer. Putting aside the 38+ services for which we provide FREE data for video through Binge On, as discussed below – this “stretching” of your data bucket is estimated to allow you to watch UP TO 3X MORE VIDEO from your data plan than before. This is a huge step forward.

Again, it's worth remembering that when T-Mobile launched this supposedly consumer-friendly offering, they completely hid the fact that it applied to all video, implying strongly that it only applied to partners. In fact, the company's CTO argued that it was not even possible to identify many YouTube videos -- a claim that turned out to be one of the many lies T-Mobile has spread over this mess.

Second, T-Mobile keeps claiming that most users can't tell the difference between 480p videos and higher quality HD videos, but that's bullshit. In many cases the difference in quality is quite obvious. And, again, if this was all about having your data "last longer" there would be no reason at all to turn it on for unlimited account holders.

Also note that T-Mobile is being a bit misleading here, as its original marketing on BingeOn noted that the free video streaming did not apply to accounts that had less than 3GB on their caps:

Next up, Legere continues to pretend that this is clearly a beneficial service that his customers wanted, despite many, many users saying that they wanted no such thing:

As with virtually all of our Un-carrier benefits, we immediately gave it to everyone! First we reached out to all of our customers via email and SMS message, and told them all about the new functionality that was coming their way. Then we turned it on, for everyone! So if you are a T-Mobile customer – you already have Binge On!

Again, this makes absolutely no sense for unlimited accounts, and the fact that it's not opt-in is just silly:

We strive to default all of our customer benefits to “ON.” We don’t like to make customers dig around to find great new benefits -- that is something a traditional carrier would do when they really hope you, the consumer, won’t take any action. Can you imagine the disappointment, if people saw our TV commercials about Binge On, then went to watch 10 hours of video expecting it to be free, and only THEN learned that they needed to go into their settings to activate this new benefit? That’s how the Carriers would do it, but not T-Mobile. Everyone has it from day 1, period.

So instead of making customers dig around to find this (which is not a "great new benefit"), they make customers dig around to find how to turn it off because they don't want it. That's exactly how the big carriers do things. And, once again, there's simply no reason why it should ever be turned on for unlimited data users.

But here’s the thing, and this is one of the reasons that Binge On is a VERY “pro” net neutrality capability -- you can turn it on and off in your MyTMobile account – whenever you want. Turn it on and off at will. Customers are in control. Not T-Mobile. Not content providers. Customers. At all times.

This is what T-Mobile is banking on as the reason why it's not violating the bright line rule against throttling in the FCC's net neutrality rules -- because there's a small "out" in the rules, saying that the no throttling rule doesn't apply to choices made by the end user to throttle traffic. Of course, that's assuming a situation where the end user proactively decides to slow down certain types of traffic, not where it's forced upon them, and there's a convoluted process to opt-out of it.

Either way none of this addresses the actual concerns raised by many T-Mobile subscribers: T-Mobile lied. It said that it was "optimizing" the video when the truth is that it was just slowing down the video. It doesn't change the fact that T-Mobile was far from transparent in explaining that this throttling (not optimizing) applied to all video, even with non-partner video. Finally, T-Mobile lied in insisting that this "optimization" would make videos load faster, when the reality is that for many video services it neither saves any data (the full file is downloaded, just slower), nor does it speed things up. Instead, it makes it buffer when there's plenty of available bandwidth.

That's what people are complaining about and T-Mobile ignores all of it, continuing to insist that BingeOn is nothing but a consumer friendly offering.

In the end, Legere gives a weak apology to the EFF that again fails to recognize why so many people took issue with his characterization of the EFF ("who the fuck are you? and who pays you?") and pretends that it's just about a difference of opinion:

I will however apologize for offending EFF and its supporters. Just because we don’t completely agree on all aspects of Binge On doesn’t mean I don’t see how they fight for consumers. We both agree that it is important to protect consumers' rights and to give consumers value. We have that in common, so more power to them. As I mentioned last week, we look forward to sitting down and talking with the EFF and that is a step we will definitely take. Unfortunately, my color commentary from last week is now drowning out the real value of Binge On – so hopefully this letter will help make that clear again.

The problem wasn't "offending" EFF, it was that EFF did a good job exposing what T-Mobile is actually doing, and rather than responding to them, you freaked out, attacked them and their credibility and acted like they were some nobody shills. That's not offensive, it's stupid and raises serious questions about T-Mobile's intentions.

Again, what is the "value" of BingeOn, other than throttling video down? Legere still keeps insisting things that aren't really true at all. It's too bad, because Legere had built up T-Mobile to be customer friendly and his reaction to this whole situation has done serious damage to that reputation.